Public Involved in the IKEA Product Recall - Case Study Example

PRODUCT RECALL IKEA, PUBLIC RELATIONS REPORT Table of Contents Table of Contents 1 Executive summary 2 1.0 Introduction 2 2.0 Why product recall is a public relations concern 3 3.0 Public involved in the IKEA product recall 4 3.1 Authority 5 3.2 Team leader 5 3.3 Media communications manager 5 3.4 Recall coordinator 5 3.5 Production manager 6 3.6 Sales 6 4.0 Business to business communications 7 5.0 Ethical and legal issues involved in product recalls 8 6.0 Significant communication problems faced by any product recall 9 7.0 Conclusion 11 8.0 Recommendations 11 9.0 References 12 Executive summary Product recall takes place when a product violates the consumer product safety regulations. This is often carried out to in order to limit the blame for corporate negligence and for protecting the business reputation. Product recall is a public concern because it concerns business reputation. While product recalls can ruin the company’s image if not properly managed, public relations seeks to ensure this image is well protected. The public involved in the product recall include government agencies, staff and the employees of the concerned company, other businesses involved in the distribution channel and the consumers. It is important to maintain business-to-business communications because this helps in maintaining the image of the company. Some of the ethical and legal issues involved in product recall include honesty, truthfulness, fairness and adherence to the legal requirements. However, product recalls often encounter significant problems such as misinterpretation, and exaggerations especially by the media. An important point to note is that communication efforts can only be considered successful if they are incorporated in a responsible behaviour, since this can continue to ruin the company’s image. 1.0 Introduction Every country has consumer protection laws that protect clients from harmful manufactured products. Such laws have certain requirements in focus to product recalls, which have greatly increased in the contemporary time. Product recall is defined as a process by which defective goods are retrieved from clients and thereafter, providing such customers with compensation (British Retail Consortium, 2003). Manufacturers usually carry out product recalls due to safety concerns over defects in manufactured products that may harm consumers. Though recalls are expensive to a company, the effort is essential as it prevents damages and limits liability for corporate negligence that may cause expensive legal penalties (Robert, 2000). This report focuses on product recall IKEA. The purpose being to evaluate how planning and execution for the initial communications of the product recall for the IKEA coffee plunger can be carried out by the company’s media communications manager. In particular, the report will focus on individuals (who) to be contacted, and what they need to be told; the public involved in the IKEA product recall; the ethical and legal issues involved in product recalls; and significant communication problems faced by any product recall. 2.0 Why product recall is a public relations concern Public relation is a field that is mainly concerned with the maintenance of the public image of the business or organizations (Seib, and Fitzpatrick, 1995). It seeks to enhance the reputation of the company in order to ensure it stands out among its competitors. In addition, public relations seeks to ensure the company maintains a good reputation to both the media and the public since the public are the ones to purchase the products while the media is charged with the responsibility of selling the products. The contemporary world of advanced technologies are putting more and more businesses at a greater risk of manufacturing products that may require further investigations regarding their safety to consumers. This may probably stand out as one of the major reasons for the increased cases of product recalls today (Souiden and Pons, 2009). The protection of the consumer’s health and safety is a fundamental and legal obligation of all organizations. All products have to be subjected to quality and safety standards tests to ensure they are safe for consumer use. However, it is common for a mistake or problem to occur that may warrant product withdrawal. Some of the major reasons for conducting product recalls are to reduce the legal responsibility for corporate negligence that may result to costly penalties and for maintaining a good public image (Rhee and Haunschild, 2006). However, it is important to note that product recalls can lead to a destruction of the company’s reputation and brands if not properly managed. This is where public relations come in. In essence, public recall is significant when it comes to matters to do with the company’s image, which is the main concern of public relations (Seib & Fitzpatrick, 1995). 3.0 Public involved in the IKEA product recall The process of product recall is carried out procedurally and it involves various company staffs who are allocated different responsibilities in order to make the process a success. In addition, the consumers, the media, retailers and the government regulators are all key players in the recall process. In IKEA product recall the following individuals are involved: the authority, the company’s team leader, media communication manager, recall coordinator, product coordinator, production manager, and sales managers. These individuals see to it that, all customers who may have purchased the defective product (the coffee plunger) stop using the product immediately and that such product is returned to any IKEA store for compensation. The responsibilities of the involved persons are explained herein. 3.1 Authority The Australian competition and consumer commission (ACCC), under the Trade Practices Act has the authority to recall harmful products. The commission’s work is to protect consumers’ rights among other obligations. 3.2 Team leader The company’s president has the vital responsibility of determining the inevitability for product recall. The president makes this decision in consultation with the legal counsel and other appropriate organizational workforce. Once being informed of the products ability of causing harm to consumers, the company’s president summons the recall team who determines the certainty for product recall. He then orders the recall coordinator to instigate the recall program. 3.3 Media communications manager The media communications manager ensures that, relevant information obtained concerning the product is reported as required and that it reaches the target individuals. He has the responsibility of issuing statements to the media. 3.4 Recall coordinator The recall coordinator carries investigations to make sure that, the product poses a threat to the consumers. He then provides all required information regarding the product for instance product description, product features among others. He then offers information concerning the hazards and the defects of the product. Lastly, the recall coordinator prepares a final report of the recall process. 3.5 Production manager The production manager provides the recall coordinator with necessary and accurate production data which may include date of manufacture, total volume of finished goods manufactured, and the affected lots. 3.6 Sales The sales manager has the responsibility of making the customers aware of the recall process in progress. Recall efficiency checks might also be carried out to ensure that the intended objective is accomplished. The information retrieved is provided to the product coordinator. Information flow chart Team leader media communications manager Recall coordinator Product coordinator Production manager sales As the media communications manager for IKEA Australia, I would contact various consumers of the product (the coffee plunger) through social networks and other appropriate means. Essential information concerning the product at stake will be communicated to these consumers. Such information will include the product defects, which is Pressure from the metal holder on the glass pot can cause it to break unexpectedly; and the hazards: Potential scalding injuries from spilt coffee/tea and laceration hazard from broken glass (Australian competition and consumer commission, 2011). This information will be disseminated to the consumers after the company’s team involved in the recall process has carried relevant investigation to make sure that what is said regarding the product is true. Upon receiving this information, customers are expected to stop using the coffee plunger immediately and take them back to any IKEA store for replacement. 4.0 Business to business communications Most of the famous valuable brands today, postulate that they generate much of their revenues from their business customers as compared to the consumers. However, this is proving difficult to carry out because of the higher costs of sale, longer buying cycles and global competition. Business to business communication remains relevant for a company that wishes to remain consistent and credible in the contemporary competitive and fragmented landscape. This remains a powerful tool especially when it comes to protection of the brand during crisis periods (Argenti & Druckenmiller, 2004). While the supplier has the sole responsibility, regarding the safety of the products, product recalls is a shared responsibility between all businesses that are involved in the distribution chain. IKEA coffee plunger contained defects that were hazardous to the consumers. This product was sold nationally meaning that there were numerous businesses involved in its distribution channel to the final consumer. However, these businesses could serve as important entities of protecting IKEA’s reputation among its consumers because they deal with the final consumers. 5.0 Ethical and legal issues involved in product recalls For a business entity to remain effective, it has to deal in reliable and effective products. The best procedure is for a business to produce high quality products that are affordable to consumers, while ensuring profits are attained (Roberts, and Dowling, 2002). It is a legal requirement for any company to recall its products whenever a problem has been detected that poses risks to the health and safety of the consumers. Product safety means making sure, the products supplied to the markets are harmless. However, each product contains its own negative effects, and it is therefore the responsibility of the company to disclose this information to the consumers or not. One of the ethical issues involved in product recalls is honesty. Well elaborate evidence is often gathered before a product is withdrawn from the market. For the case of the coffee plunger, the basis for its withdrawal from the market was due to the potential scalding injuries and laceration from the broken glass. The supplier remained honest to the customers regarding the potential hazards associated with this product. The other ethical issues are truthfulness and fairness. This means that the information provided to the customers is true. However, it is a legal requirement that the customers be refunded the amount they used to purchase the product as they bring it back to the suppliers (Roberts, and Dowling, 2002). The supplier should be fair enough to refund its customers the required accurate amount of money they spent. The other ethical issue regards whether the company will accept the moral responsibility of making product recalls. After the product has been termed hazardous and unsafe for consumers, it is the moral responsibility of the business to step out and order the public to make product recalls while make public the reasons for its undertaking. However, the business should first accept the fact that it made a mistake and make strategic plans that will ensure the products are returned to the company to avoid the negative effects. Generally, no business has the legal permit to recall a product. This can only be done with the government’s directive, according to the laws. The governments agencies gather enough information that can be used as evidence then permit the company to conduct a product recall. The law provides various standards that have to be followed while conducting product recalls, and therefore, it is a moral obligation for the company to adhere to the provided standards. 6.0 Significant communication problems faced by any product recall In any business consumer relationship, communication effective communication is essential. This allows consumers to understand better information regarding the products including new products in the market, their features, and product recalls among others. In the case of a product recall, company’s do their best by the use of social media and other means of distributing information to explain to its customers in the best way possible the product defects and the hazards such products can pose to them (James et al, 2007). These effectively offer a good communication channel, therefore, giving customers a direct means of asking questions, offering feedback and there after having their general concerns addressed. Social media is known to offer accurate and up-to-date information. This prevents customers from complaining and criticizing the company at stake. By doing this, a company ensures that customer loyalty is maintained as product recalls often pose a major threat to the company. It is true that product recalls face significant communication problems which affect the company at stake negatively. One of the major problems is inaccurate information. There is a like hood that, in case of a product recall, inaccurate information will be distributed to the customers. Such information may include the product defects and the hazards that such products may pose to its users (James et al, 2007). Inaccurate information may result from cases whereby customers with initial information regarding the product recall disseminate to other customers through social networks such as facebook, and twitter. Such information in many cases may be exaggerated and out of date. Inaccurate information concerning the product may reduce customer loyalty. Misunderstanding which is also a communication problem is very evident in product recalls. Misunderstanding occurs whereby there is poor communication between the manufactures and the customers. This may occur as a result of using poor medium of disseminating information (James, 2007). Misunderstandings in many cases worsen the situation instead of rectifying it. In product recall, misunderstanding concerning the product data may exists and this may affect a company negatively. Social media employed to distribute information concerning product recall may misinterpret such information in a way which it was not intended (James, 2007). Everybody knows that, the objective of social media is not to help individuals understand or get the relevant information; rather media aims at presenting the story in a way that will anger the reader who in return purchases more newspapers. 7.0 Conclusion Product recalls seek to protect the business from the liability of negligence and maintaining the reputation. This is a public relations concern because both deal with the maintenance of the company’s brand image. Normally, public relations are pre-occupied with the protection of the company’s reputation, an essential that could be maintained if the company conducts its product recall procedure. However, business-to-business communications are significant as they help in protecting the brand image. It is also important to consider the ethical and legal issues involved in this process such as honesty, truthfulness and fairness. An important point to note is the fact that communication efforts can only be considered successful if they are incorporated in a responsible behaviour, since this can continue to ruin the company’s image. Finally, companies should execute strategic plans that will ensure the product recall procedure is successful, while ensuring the brand is protected. 8.0 Recommendations To ensure that the recall process is a success, the media communications manager for IKEA should employ the following recommendations The communications media and methods used to disseminate information regarding the defectiveness and potential hazard of the coffee plunger should be effective to ensure that customers receive the intended information in the appropriate way possible. This will reduce misunderstandings and possibilities of receiving inaccurate information. The recall process should be simplified and the individuals involved should be reduced to make certain that the process takes the minimal time possible. This will help in building customer loyalty. 9.0 References Argenti, A., and Druckenmiller, B. 2004. Reputation and the Corporate Brand. Corporate Reputation Review, Vol. 6 No. 4, pp.368-374. Rhee, M., and Haunschild, P. 2006. The Liability of Good Reputation: A Study of Product Recalls in the U.S. Automobile Industry. Organization Science, Vol. 17 No. 1, pp.101-117. Souiden, N., and Pons, F. 2009. Product recall crisis management: the impact on manufacturer’s image, consumer loyalty and purchase intention. Journal of Products & Brand Management, Vol. 18 No. 2, pp.106-114. Seib, P., and Fitzpatrick, K. 1995. Public Relations Ethics. Fort Worth: Harcourt Brace and Company. Roberts, W., and Dowling, R. 2002. Corporate Reputation and Sustained Superior Financial Performance. Strategic Management Journal, Vol. 23, pp.1077-1093 Australian competition and consumer commission. 2011, Product Safety Recalls Australia: IKEA—FÖRSTÅ coffee/tea maker, http://www.recalls.gov.au/content/index.phtml/itemId/1000708. Retrieved May 19, 2011. British Retail Consortium. 2003. Product Recall Guidelines: A Good Practice Guide for Product Recall. London: The Stationery Office. James E.G., Larissa A.G., & Elizabeth L.T. 2007. The future of excellence in public relations and communication management: challenges for the next generation, New York: Routledge. James S. O', 2007. The Business Communication Casebook: A Notre Dame Collection (2nd ed), London: Cengage Learning. Robert B. 2000. Product recall: an aid for management. London: Leatherhead Food Research Association. Read More